Penny Stock Under Rs 5 Vikas Lifecare Approves Raising of Funds & Issue of Securities

In the afternoon of Friday, the small-cap stock Vikas Lifecare was up 0.45% at Rs 4.43 a share. This followed the company's approval of the securities issue and fundraising.

The Board of Directors of the company met today, Friday, December 20, 2024, and decided that in order to boost long-term resources and finance organic and inorganic growth opportunities in the company's operations and adjacencies, funds should be raised, subject to all applicable approvals, by issuing equity shares or any combination of them through QIP, FCCB, Further Public Offering, and Rights issue, or any other permissible mode or any combination thereof, in one or more trenches for a total of no more than Rs. 200 Crore.

The Vikas Lifecare Board also gave their approval to raise the company's authorised share capital from Rs. 200 Cr to Rs. 235 Cr.
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This good situation came on the back of a recent announcement made by VLL regarding a new partnership that they had made with the defence research and development organisation of India which was aimed towards commmercialising a new technology that aided in the making of such granules. These granules were developed for manufacturing biodegradable bags that are a more economical and efficient way to reduce the large dependency on single-use polyethene bags. It is likely that such collaboration will allow the company to be a leader within industries reliant on green technology as such bags are in demand.

The VLL has initiated a good strategy, especially in biodegradable granules which are expected to be in high demand and due to this the Indian market for plastic packaging is expected to reach around USD 25.35 billion by the year 2029. Such granules can potentially allow VLL to assist in addressing pollution issues across the globe allowing an economy circled around the granules to develop.

This Agreement VLL granted exclusive rights to produce and sell both locally and internationally the biodegradable granules solitarily for a period of ten years, marking a shift of the company's focus from recycling plastic waste to the next step of actively seeking sustainable solutions.

VLL's financial results were also able to restore investor confidence in the company. The company's net sales in the second quarter of FY25 increased by 46.5 per cent from seventy-two percent to the revenue figure of Rs 134.88 crores compared to the third quarter of last year in which the net sales stood at Rs 92.09 crore. For the Quarter under review, the company's net profit stood at Rs 2.15 crore signifying a strong reversal from the loss of Rs 2.91 crore that was recorded in the second quarter of the Financial year 2024. The annual results for the year 2024 were more or less similar as the trend reflected where the net profit improved to Rs 13.95 million as compared to the Rs 15.55 million loss the company made in fiscal year 2023.

The expansion adds the operational other, sealing the growth of the company head more. An additional twenty thousand square feet were added to the factory and imported into the shahuji industrial area RIICO site in Rajasthan was specially opened in December 2024. This latest factory specialises in the production of modern compounds like EVA, ATH, thermoplastic rubber, and thermoplastic elastomers with an annual output of above 5000 MTPA.

The facility, set up under the Rajasthan Investment Promotion Scheme (RIPS), is said to have potential revenues of Rs 400-500 million and is expected to leverage SGST refunding and tax exemption as sources of advantages over other competitors in the market.

VLL, as a diversified company, also has a competitive edge in polymer and rubber compounds, speciality additives and smart gas metering solutions. Through its subsidiary Genesis Gas Solutions, the company is now the leader of smart gas metering in India and that position is being strengthened with a recent joint venture with IGL. Apart from the industrial activities, VLL has extended its activities to B2C with investments in FMCG, and agro-products, and has built the infrastructure in the recent past to move into film production, declaring its active search for new growth areas.

VLL's strategic initiatives and financial strength are well-forecasted and achieve the objectives of the organization in effectively sustaining innovations pointing to the potential success of the company.